68% of Americans Don't Know This One Critical Fact About Social Security - And It Could Cost Them Thousands

When you create your retirement plan, it's really important that you understand how Social Security factors in.

Social Security benefits are one of the few, if not the only, sources of lifetime guaranteed income many retirees have. Plus, the automatic protection against inflation that's built into the benefits program makes these benefits really valuable.

Unfortunately, not only are Americans unaware of some key Social Security facts, but they are actually wrong about one big issue. And the misconceptions held by 68% of Americans are likely to end up costing them.

68% of Americans get this Social Security fact wrong

According to a new study by the AARP, the majority of older Americans are very confused about a key Social Security fact. The AARP's survey of adults aged 50 and up found that just 32% understood what would happen if Social Security's trust fund is depleted.

Most retirees fear that if the trust fund disappears, Social Security benefits will be eliminated entirely. This has long been a source of concern for millions of Americans, with around four in 10 respondents to a 2025 Gallup survey expressing doubt that Social Security is still going to be available in a decade.

What happens if Social Security's trust fund runs dry?

Like many fears, concerns about Social Security's future have some basis in reality. In fact, the Social Security Board of Trustees just released its 2026 report on June 9, 2026. The latest report warns that the cash reserves for the Old-Age and Survivors Insurance (OASI) program are expected to be depleted in the fourth quarter of 2032.

If the money runs out, the OASI trust fund and the Social Security Disability Insurance trust fund could be combined, creating a pooled pot of money that should last until 2034. At that time, the trust fund would theoretically be on track to be officially empty.

What Americans get wrong, though, is what happens if that happens. If it does, Social Security isn't going to stop paying benefits. Instead, it has enough to pay around 83% of the scheduled amount.

Why don't benefits stop when the trust fund runs dry?

The good news is that Social Security has a steady source of revenue even if the trust fund is drained to $0. Current workers pay Social Security tax, while retirees with countable incomes above a certain threshold pay tax on up to 50% to 85% of their Social Security retirement benefits.

Money collected from these taxes is used to pay the majority of what is owed to Social Security benefit recipients.

But, under the current rules, Social Security isn't allowed to just borrow from the government's general fund. Once the incoming revenue is allocated to benefits, if there's nothing left in the trust fund to make up for the shortfall, benefit cuts happen automatically.

The cost of Social Security misinformation

Unfortunately, the fact that so many Americans don't understand the truth about Social Security's trust fund depletion is actually a big problem.

The Center for Retirement Research revealed that scary headlines about Social Security, including those related to the trust fund running out, drive earlier claims. In other words, people claim their benefits ASAP because they're afraid the money is going to run out later. But by doing so, they lock in a reduction in benefits.

Why claiming early may not be the smartest move

Claiming Social Security before full retirement age results in early filing penalties, while failing to wait beyond FRA until 70 leads to missed opportunities to earn delayed retirement credits. For a retiree with a full retirement age of 67 who is on track to earn the average benefit of $2,071, the difference between a claim at 62 and one at 70 is $1,118 per month.

Someone who claims at 62 out of fear could very well lose out on a lot of money that they otherwise might have had coming. That's a high price to pay for not knowing the truth about what happens when the trust fund runs dry.

Bottom line

It's very clear that misconceptions about Social Security's future are both common and a big problem if people decide to claim benefits sooner than they would otherwise have because they fear the program is going to be broke later.

You don't want to buy into common misperceptions and lose thousands. Avoid this financial mistake by carefully researching what factors affect Social Security, what future benefits are likely to look like, and how to take steps like minimizing any taxes due on your benefits.

Preparing properly for the day when you'll receive Social Security is key to a stress-free retirement, so do your research or get the help you need from a financial advisor to better understand how the program works and what claiming age is right for you.